3 Work Life Insurance Drawbacks: Is it Enough?

Is the life insurance you’re getting through your employer enough to take care of your family? And are you paying too much for that coverage? While basic employer-provided life insurance is low-cost or free, your policy’s face value still may not be high enough. If your premature death would be a financial burden to your spouse and/or children, you may need coverage worth five to eight times your annual salary. Some experts have recommended getting coverage worth 10 to 12 times your annual salary.

Both millennials and seasoned professionals alike commonly mistake work life insurance as enough life insurance for their needs, but there are some drawbacks to employer-provided life insurance that you should be aware of.

Basic Policies Have Low Limits

Life insurance from work typically has a low policy value. Sometimes those life insurance policies are capped at around $100,000. Think about it for a minute. If you pass away, is $100,000 enough to secure your family from your lost income for the long-run.

At several of my past employers, I had a free basic policy and the ability to get a higher level of coverage. Taking advantage of anything you get for free is a fabulous idea, and you can often go up to around $300,000-$500,000 policies without any medical exam for relatively low cost life insurance. Typically these policies that require no medical exam are more expensive than what you would qualify for with full underwriting. And workers with those options will still find that they typically fall short of meeting their family’s needs.

Insurance from Employers in Not Portable

As with health insurance, you don’t want gaps in your life insurance coverage, because you never know when unthinkable might happen. Most workers who get coverage through work don’t know where their life insurance will come from if they change jobs, are laid off, their employer goes out of business, or they switch from full-time to part-time status. Usually you won’t be able to keep your policy in these scenarios. The lack of portability can be a big problem if you aren’t going directly to another job with similar coverage.

Should a worst-case scenario occur during a period where you don’t have life insurance coverage, your family is left to fend for itself dealing with expensive medical and funeral costs. From there, they’ll have to figure out how to survive without your income. Can they do that?

If the answer is no, which is the case for most American families, you need your own term life insurance policy to ensure your family is protected and financially prepared should the unthinkable happen, where you’re no longer around.

Getting Your Own Term Life Policy Protects Your Family

Talking about death, wills and life insurance is not a fun topic, but it is a critical one as your family’s security is no laughing matter. Life insurance at work, can be insufficient and to truly protect your family and it’s best to speak with a life insurance expert to learn about additional life insurance options, outside of work, that might benefit your family.

Signing up for your own term life insurance policy independent of your employer is easier and cheaper than you might realize as well. Most applications only take a few minutes to fill out, and you can review instant, no obligation life insurance quotes.

One of the key components for obtaining term life insurance is a needs analysis to determine what face and term length might be appropriate for you and your family. Also, keep in mind that each insurer has its own risk categories, or underwriting classes. The most commonly used classes, from best to worst, are: preferred plus, preferred non-smoker, standard plus, standard non-smoker, preferred smoker, and standard smoker. These classes price policies. For example, people who smoke pay more than those who do not because their likelihood of death, while the life insurance policy is in effect, is greater than someone who is a non-smoker. Try and work with an expert who has access to a number of these different underwriting company guidelines in order to get the best policy, with the best company for you and your loved ones.

Once the life insurance agent completes the needs assessment (which can take approximately 20 minutes)  and has reviewed the different guidelines and determined the best term life insurance length, you will need to undergo a quick, simple and free  medical exam. A certified paramedical examiner will meet with you at your convenience to complete the insurance mini-checkup – you choose the time and place, whatever works best for you. Many fear the dreaded medical exam required by insurance companies but they shouldn’t. In most cases, a policy with a medical exam will yield a lower monthly rate than a policy with no medical exam. At the end, you’ll have a low-cost policy that goes with you no matter where you work and live. Rates go up as you age, so the earlier you can lock in a term policy, the more you’ll save.

In conclusion, even if you have life insurance at work, it is likely not enough to truly protect your family. It’s best to speak with a life insurance expert to learn about additional life insurance options. Don’t just get any life insurance policy, make sure you get the right one for you and your family.

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